March, 2026 – It’s hard to believe that it’s March 2026. I remember watching 2001: A Space Odyssey, thinking “wow that is so far away.” Some of you may remember thinking the same thing when reading 1984. If you’re like me, you may feel like you’re living in that book. Or perhaps Atlas Shrugged. Who is John Galt, right?
In any event, here we are. Stocks, Artificial Intelligence, and Gold and Silver have had a banner run so far. And so has our debt. We are quickly approaching $40 TRILLION!
I know what you’re thinking: “Kevin, why do you have to constantly harp on this debt thing?” Well, I certainly don’t enjoy talking about it, but no one else will, and it’s not going away.
Sooner or later, we will have to face up to it. So, let’s be realistic, we will never pay it off. We can’t pay it down. We can’t stop borrowing. We can’t even slow down the borrowing. What’s worse—we aren’t even trying.
As of February 26, 2026, we have spent almost $2.5 trillion. That’s not even TWO full months! We are on track to spend over $10 trillion this year, up from $7 trillion last year. This is insane, and just not sustainable.
All this debt comprises what we lovingly call the bond market. Our federal debt is held primarily in the form of treasuries. But something is rotten in the bond market.
Bond prices and interest rates have an inverse relationship, so as interest rates drop, bond prices will rise. The Fed initiated a rate-cutting cycle in the second half of 2024, with three consecutive 25-basis-point cuts in September, November, and December. The easing trend continued into 2025, with additional cuts, including a 25-basis-point reduction on September 17, 2025.
Quizzically, bond prices have barely moved. And the yield curve is still inverted at the short end, so that 30-day notes pay more interest than 6-month notes, and 1-year notes pay more interest than 2-year notes. What can this mean?
It means that there is no longer any global appetite for our debt. In addition, since we have alienated many of our trading partners, they have been silently (and maybe not so silently) dumping our debt.
This chart illustrates the holders of those treasuries. China used to own well over $1.2 trillion; today they own less than $700 billion. Brazil used to own well over $300 billion; today they own $169 billion. Almost every country has reduced their treasury holdings, while we have been increasing our domestic purchases—meaning more and more, we are buying our own debt.
The grey section above is “government held,” meaning federal agencies and state and local governments. This alone is $7.7 trillion. Another $21.6 trillion is “U.S. held.” This is people like you and me, insurance companies, pension plans, and the Federal Reserve, which alone owns $7.6 trillion.
Now, insurance companies, pension plans, grandma and grandpa, you and me, we all have something in common, which is quite distinct from the Fed. We all have to pay for those treasuries with money that we had to earn somehow (or inherit from someone who earned it). The Fed, on the other hand, is the only entity that can buy treasuries with money that is created from nothing—poof, just like that. This is the very heart of inflation, and they own $7.6 trillion. Most of this was created during the pandemic.
The result of all this freshly minted money is simple: prices rise as the value of our currency is reduced. This price phenomenon is not limited to eggs and milk and housing, but it also affects stock prices. More money chasing the same assets will create a price bubble in those assets. Stocks are dangerously high.
Here is the CAPE—the cyclically adjusted price to earnings ratio, which has only been this high twice before. The last time was 1999, the time before that was 1929—The Great Depression. Prudence calls for caution, wouldn’t you agree?
One of my favorite bankers (if there ever was such a thing) is JPMorgan Chase CEO Jamie Dimon. He said last Monday that he was anxious over the U.S. economy, citing elevated asset prices and a competitive environment in banking that reminded him of the pre-2008 crisis years.
“My own view is people are getting a little comfortable that this is real, these high asset prices and high volumes, and that we won’t have any problems,” said Dimon.[i]
Inevitably, Dimon said, the economic cycle will turn, leading to a wave of borrower defaults that would broadly affect lenders, and often impacting industries few people expect.
“There will be a cycle one day … I don’t know what confluence of events will cause that cycle. My anxiety is high over it,” Dimon said. “I’m not assuaged by the fact that asset prices are high. In fact, I think that adds to the risk.”
Indeed, Jamie is referring to a market cycle, which could be caused by sector rotation. It’s no secret that the technology sector has been going gangbusters since the end of 2022, when it took about a 50% hit. A.I. and the promise of quantum computing have sent that sector soaring, just as the internet did in the late 90’s.
Today, as in 1999, over 30% of the S&P 500 is comprised of that one sector, and when it rotates out of favor, the entire market will rotate.[ii] This is why Jamie is so anxious—poor guy.
The chart above shows the returns of each sector as of the end of February. You can see that energy is leading the way (this was before the Iran conflict) and technology is lagging so far this year. Could this be the harbinger of a deeper drop in the tech sector, which would transmute to a lower broad market as in 2000?
Our newest war is creating uncertainly, which always causes market jitters. Could this be the “confluence of events” Jamie was talking about? Stay tuned to find out.
We will be having our first Lunch ‘n Learn on March 24 when we will discuss these issues and more. If you can’t make it, a webinar will follow. Be on the lookout for your invitation, and don’t forget to register.
Our transition to Schwab is nearly complete, and I can’t thank you enough for helping us make it successful. In the next few months, we will be rolling out new software and benefits that will be the best in show. Very exciting!
As always, we appreciate having you as a member of our family. If you have any questions or concerns, please take a moment to reach out to me at 404-257-8811. I always love to hear from you even if it’s just to say, “Hey I read your letter and I think you’re crazy.” Have a safe and happy spring and we’ll see you soon.
Very Truly Yours,
J. Kevin Meaders, J.D. CFP®, ChFC, CLU
The views and opinions are those of J. Kevin Meaders, J.D., CFP®, ChFC, CLU and should not be construed as individual investment advice, nor the opinions/views of Magellan Planning Group, Inc. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Additional risks are associated with international investing such as currency fluctuation, political and economic stability, and differences in accounting standards. Due to volatility within the markets mentioned, options are subject to change without notice.
Investors cannot invest directly in indexes. The performance of any index is not indicative of the performance of any investment and does not take into account the effects of inflation and the fees and expenses associated with investing. S&P 500 – A capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. Dow Jones Industrial Average, Dow Jones, or simply the Dow, is a price-weighted measurement stock market index of 30 prominent companies listed on stock exchanges in the United States. The Nasdaq Composite is a stock market index that includes almost all stocks listed on the Nasdaq stock exchange. The Nasdaq Composite is a stock market index that includes almost all stocks listed on the Nasdaq stock exchange.
Magellan Planning Group, Inc is a SEC Registered Investment Advisor. Estate services offered by Magellan Legal, LLC and tax services offered by Magellan Tax, LLC.
The return and principal value of bonds fluctuate with changes in market conditions and interest rates. If bonds are not held to maturity, they may be worth more or less than their original value.
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